Thank you. Thank you very much, Lydia Scuglia, the President of the Eastwood Chamber of Commerce, my Parliamentary colleague and friend Andrew Tink, the mayors of Ryde and Hunters Hill, the local police patrol commander, ladies and gentlemen. I am very pleased indeed that the organising skills of the Eastwood Chamber of Commerce enabled the availability that I had on the eve of the Budget, it meant that I was able to come today and to share some thoughts with all of you about the state of the Australian economy. And nowhere better and nowhere more appropriate to do it, of course, than at a gathering of what is a representative group of the small and, in some cases, not so small, businesses of which the electorate of Bennelong boasts many.
And in a sense the engine room of the Australian economy remains, as it always has been, and that is the small business sector. When small and medium sized businesses in Australia are doing well, then the entire Australian economy is doing well. And today of course I'm able to say that Australia is in the 15th year of the longest unbroken period of economic expansion our country has experienced since the end of World War Two. It's been a remarkable period of economic growth. It's an economic period which is built very, very much on some strong fundamentals of the Australian economy, the type of which we haven't experienced in our previous economic history.
My outlook for the economy is one of continued optimism and continued confidence about the future. As always there are some clouds on the horizon but almost all of the clouds there are on the horizon, and they're not very large clouds, are clouds that have been formed by forces elsewhere and over which no Australian Government, irrespective of it's political stripe, has a great deal of direct control.
I think it's fair to say that we are strong now because of changes and reforms that have been undertaken over the previous 15 or 20 years. Now there's a lesson in that, and the lesson very simply is that the prosperity of today is a product of the reforms of yesterday and it follows from that rather logically that if we are to have continued prosperity into the future, we must continue to carry out economic reforms today.
And that of course brings me to one or two or the issues that are economically topical at the present time and the first of those that I would mention are of course the Government's industrial relations changes. Now these changes were long overdue. They will produce in the Government's strong view, higher levels of employment, greater flexibility especially for small and medium sized businesses and will add very much to the strength of the Australian economy over the years ahead. I've made this comment in a couple of speeches I've made elsewhere in Australia over the past few weeks, but there was front page of the well known international economic magazine called The Economist a couple of weeks ago and it was talking about the outcome of the election in Italy which produced almost a stalemate, and a very, what I might call, narrow change of Government from one side of politics to the other. And also the extraordinary situation in France where because of riots in the streets the government of that country, which is of a centre right disposition, had decided to retreat on some very long overdue labour market reforms. And I thought there was a lesson in that front page for Australia and the lesson was that there is really no alternative but to maintain a continuous process of economic reform. And the reason why economic reform has become so hard in France and in many other parts of Europe is that they haven't carried any of it out for the last 10 or 20 years. And once you lose the habit of reform, the people have no stomach for it. And one of the reasons why we have to keep reforming and changing our economy and improving it is that if we fall into the complacent belief that we no longer need to do any more economic reforms then we're going to be very sadly mistaken, we're going to lose momentum and we're going to find it very hard to pick up the cudgels of reform in the years ahead.
And for those who may in the community say that our industrial relations reforms are unnecessary, for those who may say why don't you just rest on your laurels? The economy is going well, unemployment is low, inflation is low, business profitability is good, the budget is in surplus, all of those things are right. But the reason why those things are right is that in earlier times, in earlier years governments have undertaken economic reform and if we're going to keep it that way, we have to keep the process of economic reform going. And if ever there was a good time to have industrial relations reform in Australia, it's now because we are operating in a workers' market like never before. The demand for high quality employees is stronger than it's been at any time I can remember in the 30 odd years that I have been in public life. Therefore it's in an atmosphere like that when it's very good to carry out the sort of reforms that we have undertaken.
One of them of course is the long overdue removal of those unfair dismissal laws, which I know from my experience over the past 10 years as Prime Minister, whenever I mention their existence to a small business gathering, I would get a collective groan. Because all of you in different ways have experienced over the last 10 years the way in which the previous unfair dismissal laws actively discouraged you from taking on more staff because you knew if you recruited an unsatisfactory person, it became a veritable nightmare to do anything about it. And that has been a reality of small business in Australia for many years and the changes that we have announced should be seen in that context.
Now it's not possible of course to talk about the Australian economy at the present time without acknowledging the painful impact on consumers and business alike of high petrol prices. And it's of no reassurance to any of you to say well don't worry, our petrol prices and amongst the lowest in the world. They're the fourth lowest in the world. Whenever I say that to anybody they say yes, what is your next explanation and that is of course of no earthly comfort to anybody because everything is relative. And the only thing that matters is the price of petrol in Australia now compared with the price of petrol in Australia a year ago. They're not very interested in the price of petrol in Australia now compared with the price of petrol in Britain now or Japan now or Germany now, three countries where, let me hasten to assure you, the price of petrol is much, much higher than what it is in Australia. But this is a challenge to the Australian economy.
It's a challenge that is not going to disappear I'm sorry to say in a hurry. It is the product of a worldwide excess of demand over the supply of crude oil, there's been an underinvestment in refinery capacity around the world, there's been an enormous surge in demand from a growing China and I saw a summary this morning of the International Monetary Fund's outlook for the world economy and it was predicting that the American economy was going to grow very strongly at, what, 3.5 percent. The Australian economy was going to grow very, very strongly and the Chinese economy also was going to grow very strongly, yes, at a rate of about 9.5 percent over the year ahead. And the economic growth that's occurring in China, and now there is the beginning of a replication of that economic growth starting in India, is something that is having an enormous impact because of the size of the Chinese economy. And just take this little thought away with you today, and that is that by the year 2015 for the first time in the history of the world since the industrial revolution, the centre of gravity, if I can put it like that, of the world's middle class, will not be in Europe or North America, it will be shared between China and Asia and China and Japan. And this represents an enormous change in the world economic outlook. It presents great opportunities for Australia because of Australia's very strong trading links already with North Asia and the great capacity we have to increase those trading links.
Now I therefore have a very optimistic view about the Australian economy. I believe that we will continue to grow at a very strong rate because we've got the fundamentals right. We are a more open economy, we're a more competitive economy, we have quite low levels of inflation and as a result, notwithstanding the small adjustment to interest rates put in by the Reserve Bank, we still have historically very low levels of interest in this country. We have undertaken a lot of economic reforms, we have paid off all of our net Government debt and we have, in the words of the IMF, an enviably prudent fiscal position. In other words, we've got our budget well and truly into surplus and we certainly intend to keep it that way.
But the one great precondition in my opinion, to continue economic growth as the years go by, will be a determination by whatever the government of Australia may be, to continue the process of economic reform. And if I'd been addressing this gathering 20 years ago, or perhaps, let's go back 25 years, let's go back to 1981. If you could take the Australian economy back to 1981, we had a fixed exchange rate, we hadn't floated the dollar, we had foreign exchange controls, we had very high tariff walls, we had a completely antiquated taxation system and we hadn't begun, in any semblance or shape, the process of reforming our industrial relations system. We were still in many ways, operating not as a national economy, but we were still, in some areas, operating as a grouping of perhaps five or six regional economies. And if you go back over that 25 year period from say 1980-81 through to where we are now, you can see the enormous reforms that have been undertaken. The floating of the dollar, the dismantling of exchange controls, all the industrial relations reform, taxation reform, some years ago, the liberalisation of the tariff regime; some of those reforms were carried out by the former Government with my very strong support and others of course have been carried out by the present Government and continue to be carried out by the present Government.
So this economy and this country has changed a great deal over the last 25 years. Not everybody has found that comfortable, that unfortunately is always the case. But the general level of prosperity and hope and optimism in Australia at the present time is quite remarkable. And I travel around Australia a great deal as you probably observe from the news coverage of what I do, and I have not found a greater sense of hope and optimism economically in this country at any time in my public life than I have found over the last couple of years. And even in those parts of Australia that for many years were missing out on economic progress and economic growth, and I think particularly of parts of Tasmania and I think particularly of parts of South Australia, they have enjoyed the benefits in the last few years of national economic growth, the like of which they haven't had before.
So Madam President, my message is a very optimistic one and I do want to say to all of you, and I'm very anxious to take your questions and receive any advice that you want to give me about any aspect of anything, I'm a great believer in getting advice from as many people as possible, I do want to say to you that I meant very much what I had to say about the importance of the small business sector in the Australian community. And this gathering does bring so many of those people together and represent so many of those interests. And when the small business sector of the economy is doing well, the entire economy is doing well. And if you look at the profile of employment, the additional jobs that can get created in our community are in the small business sector. And large businesses are often focussed on downsizing and rationalisation; small businesses are focussing on experimentation, innovation and having a go, and in the process taking on more people and giving more people opportunities. And that is what has happened in Australia over the last few years and that is what I hope continues to happen in Australia over the years ahead, provided we continue as a nation, as a community to have the courage to maintain the momentum and the pace and the application of economic reform.
Thank you very much.
[ends]